For most companies, an in-house training center doesn’t have to be brick and mortar, and doesn’t necessarily require additional equipment and personnel to support it. It is about focusing the resources already available to develop workers faster and to a much higher level of capacity. This does not happen by throwing dollars or classes at the problem; if that were the case many employers who did so would have solved the “skills gap” problem. It takes a more deliberate approach than that to achieve the outcome that has been out of reach, for many, for decades.

In previous articles, such as in the May, 2016 issue of the Proactive Technologies Report, “A Simple Solution to Skill Gaps – New-Hires and Incumbents” I described a simple, easy to implement strategy for developing new-hires and incumbent workers to full capacity. I emphasized that by focusing on the outcome, the proper inputs become clearer. But by focusing on the inputs, the connection to the outcome may not necessarily be clear. Any use of irrelevant, improper or ineffective worker development inputs means unnecessary costs with low or no return, wasted time and additional opportunity costs.

Over the years, I have noticed that many employers’ idea of a worker training strategy is a hodge-podge of classroom and online training. This seems to be based on the assumption that all of the right people have been hired, they all have mastered the tasks of the job and that a few classes will drive each worker’s performance to higher levels.

Where does this assumption come from? Why do employers collectively settle for this type of model even though decades of experience and day to day worker performance offer many clues that this model of worker training is not as effective as hoped? Too often the feedback from workers attending classes is, “I don’t know why the company had me attend that class.” “That was a waste of time.” In an informal way, this is a form of “content validation,” or in this case “invalidation.”

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“Conceptually, a better overall approach is simple, accurate, efficient and effective. If an employer isn’t including these simple steps in their worker selection, development and performance evaluation strategy the might be wasting company time, money and resources.”

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This legacy approach is a comfortable model to explain. Everyone has attended school; some higher education as well. It is what we grew up with and the sentiment has become acceptance from familiarity. Some accept this approach because they are unaware of better alternatives. Some find comfort in being among the “herd.” Most of the employers seemed locked into this model, so it must be the right way to train workers. If this were true and reinforced with evidence, why after 30 years of concentrated application (as technology entered nearly every aspect of worker performance) the “skills gap” we all talk about has not only survived, but has actually grown? Read More

The High Cost of Employee Turnover

Most companies are dealing with uncomfortably high levels of turnover. When one separates out those employers that facilitated high turnovers to lower labor costs, there are many reasons for this. However, there is no denying the many costs associated with this that exist and the effects that often compound. These costs are often unknown and unmeasured, but all employers should keep an eye on this challenge and explore its full impact on the organization.

It seems counter-intuitive, but there are some who even recently promoted a business strategy that encouraged employee turnover. In a July 21, 2015 Forbes article entitled “Rethinking Employee Turnover,” author Edward E. Lawler III, “Indeed, the turnover of some employees may end up saving an organization more money than it would cost to replace that employee. The obvious point is that not all turnover should be avoided-some should be sought.” The question is how to determine which ones to keep and which to encourage to leave. Without accurate measures of costs and values of a worker, good employees may be pushed out along with the “bad” and then the true costs of this action realized by the employer after it is too late.

Last year, Christina Merhar of ZaneBenefits wrote in her blog entitled “Employee Retention – The Real Cost of Losing an Employee,” “Happy employees help businesses thrive. Frequent voluntary turnover has a negative impact on employee morale, productivity, and company revenue. Recruiting and training a new employee requires staff time and money. According to the Bureau of Labor Statistics, turnover is highest in industries such as trade and utilities, construction, retail, customer service, hospitality, and service.”

“For the costs associated with the loss of 1 or 2 employees, the company can establish a holistic approach to worker selection, development and retention that will significantly lower both turnover rates and turnover costs, AND increase the value of all employees in that job classification.”

“Studies on the cost of employee turnover are all over the board. Some studies (such as SHMR) predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses.

But others predict the cost is even more – that losing a salaried employee can cost as much as 2x their annual salary, especially for a high-earner or executive level employee.

Turnover seems to vary by wage and role of employee. For example, a CAP study found average costs to replace an employee are: Read More

Do U.S. Productivity Measures Measure Productivity?

by Dean Prigelmeier, President of Proactive Technologies, Inc.

A disturbing emerging trend, particularly in the last three decades, concerns the accuracy and quality of the economic statistics reported to the public. A lot of think tanks have sprung up in Washington issuing reports and policy statements, and some put a cloak of perceived “credibility” around statements they release meant to support a policy direction or change its course – both to the benefit of a segment of interests subsidizing the think tanks. Confusing us even more is the mainstream media’s propensity to report, as “news,” press releases emanating from these think tanks as if accurate, unbiased and inherently factual. Some may be, but when they are reported through the same careless filter, it throws them all into suspicion. The decrease in the number of accurate, readily available sources of news and facts can derail a life or business strategy.

Take for example the daily explanations by news and business show anchors of why the stock market gyrates up or down, as if the collective market can always be explained simply as, “the stock market reacted to the federal reserve’s decision to not act,” or “the stock market tumbled because of the results of the presidential election” – only to recover fully the next day. Could another simple explanation be that the market moved one way or another because groups with large holdings decided to move them?

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“Unfortunately, however, figures on productivity in the United States do not help improve productivity in the United States.”

W. Edwards Deming

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Another example is the preoccupation with what is referred to as “inflation,” which is based on the consumer price index (“CPI”). A “basket of consumer goods” was selected and periodic measurements of their retail prices are taken to see, primarily, if any inflationary forces exerted pressure on prices upward or downward during the period that might require an adjustment in central bank monetary policy. First, it is important to know which goods make up the basket.

Many years ago an effort was made to take out the goods prone to price pressures. This explains the stares at price labels by the shopper who heard on the news in the morning that inflation has not risen but is looking at prices in the afternoon that seem to continually rise. The decision was made that some goods didn’t need to be in the basket because consumers could substitute them with other, less-expensive goods and still be happy with the experience. For example, substitute mac and cheese for chicken. The trouble being in that even those prices rise.

According to Wikipedia,” Core inflation represents the long run trend in the price level. In measuring long run inflation, transitory price changes should be excluded. One way of accomplishing this is by excluding items frequently subject to volatile prices, like food and energy.” Other volatile prices such as the cost of healthcare, travel, housing and education are not measured in inflation, either – categories causing the biggest dent in household budgets. Retailers have found other ways to confuse the calculation further by offering seemingly super discounts…discounts if you buy 10 of the same items, coupons or sale prices when the beef doesn’t sell at the $14 per pound price. Others have kept their base price low but tacked on endless fees which are not included in calculating inflation.

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“There are so many people who can figure costs, and so few who can measure values.”

Larry Fast

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Employers have made use of the dichotomy between inflation and core inflation, as well. They have learned they can justify no cost-of-living wage adjustment by pointing out that inflation – the partial reflection of price increases – has not risen, so a wage increase isn’t warranted. Ironically, US Supreme Court Chief Justice Roberts asked Congress in January, 2009, for a raise saying “I must renew the judiciary’s modest petition: Simply provide cost-of-living increases that have been unfairly denied,” Roberts said in his annual year-end report on the federal judiciary. At a time when millions of Americans were losing there jobs and homes during the Great Recession of 2008, apparently inflation – core and regular inflation – only impacted high level government officials.

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“If you efficiently increase worker capacity and performance, and even if you raise the wages to reflect the increasing value of the worker, your productivity should increase as your costs stay stable or decline. But far too often a false conclusion is drawn that you can cut costs by cutting the cost of labor and there will not be repercussions in the long-term.”
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The Key To Effective Maintenance Training: The Right Blend of Structured On-The-Job Training and Related Technical Instruction

Dr. Dave Just, MPACT Maintenance and Reliability Solutions

I spent a lot of my career as Dean of Corporate and Continuing Education at community and technical colleges, in several states. Where we could, we tried hard to provide the best core skills development delivery for technical job classifications the employers in our community requested. We often did this working off the limited, and often suspect, job information the employer could provide to us.

Often we were up against budgetary constraints that limited our efforts to customize programs and keep the programs up to date when the instructor was willing to maintain the relevance of the program. If that wasn’t enough, school leadership often showed ambivalence toward adult and career education due in part to the fact that its demand was driven by gyrations in the economy. Furthermore, the institution was built upon, more familiar with and understood better credit courses for the more stable subjects such as math, science, literature, history and the social sciences.

We tried a lot of innovative programs for employers in the community within the constraints mentioned, but if I was to be honest we rarely kept up. What we thought we knew of the targeted job classifications and their requirements, and upon which our programs were built and measured, seemed to become increasingly misaligned within just a few years. Not only was advancing technology putting pressure on the content of our learning materials and program design – a constant push toward obsolescence – the employers were continually rethinking the design of their job classifications to meet their business goals and budgets. We were finding less and less similarity in job classifications between employers, by job title and job content.

The “Maintenance” job classification was a perfect example and could be incredibly different from company to company. In the early days, Maintenance was thought of as multi-craft; a maintenance person was responsible for maintaining all aspects of the operation. Some companies tried to hold onto that concept of Multi-Craft Maintenance but, as Multi-Craft Maintenance Technicians were becoming harder to find and therefore required higher pay, more and more companies began to deviate from multi-craft to specialty and single-craft positions that cover only limited areas such as facilities, electrical or mechanical. Some Maintenance positions did not include HVAC, some were primarily focused on servicing machines but not repair. Some employers subcontracted out facility maintenance and instead had their Maintenance employees perform preventative maintenance tasks on everything from manual machines to PLC driven multi-axis machines, to robots and robotic manufacturing machines – leaving the servicing to the warranty and/or contracted OEM experts. Trying to find the right balance between an effective Maintenance program that gives every employer what they wanted but does not train for skills that one might never have a chance to use and master and most likely would forget, proved increasingly difficult to say the least.

This dilemma for program and instructional design, I believe, is worse today. Read More